When a negotiable instrument is transferred,the holder has greater rights because he or she is not subject to some of the defenses that could otherwise have been raised against the transferor.

Question

Quizplus · Accepted Answer

This statement is true. When a negotiable instrument is transferred, the transferee or holder in due course (HDC) has greater rights because they are not subject to certain defenses that could have been raised against the transferor or previous holders. These defenses include lack of consideration, fraud in the inducement, and others outlined in the Uniform Commercial Code (UCC).

When a Negotiable Instrument Is Transferred,the Holder Has Greater Rights